According to Bloomberg article published on April 17, 2023, the European banking industry has withstood the challenge posed by the crisis sparked in March, Deutsche Bank AG Chief Executive Officer Christian Sewing said.
“The past weeks were a test for the European financial industry - but we weathered it well,” Sewing said at a press conference on Monday, where he was speaking in his role as head of the German banking lobby BDB.
He said that the financial industry was bolstered by its “profitable and robust banks,” and the European Union’s regulatory and supervisory system, which was shored up after the global financial crisis.
Europe’s banks faced investor fears about contagion last month after several lenders in the US and Switzerland — including Credit Suisse Group AG — collapsed. Days later, Deutsche Bank was in the middle of worries about the industry generally that sent prices for insurance on its bonds temporarily shooting up.
The bank runs have alarmed regulators who are now thinking about ways to adapt regulations. Sewing said in his speech that European regulation has worked well in the past and is generally more strict than in the US.
German Finance Minister Christian Lindner said that there was no systemic financial or banking crisis, but instead any scrutiny should be aimed at individual lenders.
“That is why the conclusions of this situation should focus on individual institutions and not on the sector as a whole,” Lindner said at a BDB event.
Financial institutions should make an effort to improve their competitiveness and central banks shouldn’t take banks into account deciding on monetary policy, as price stability should be the priority, Lindner said.
He added that there is one area that regulators should look at more closely: shadow banking, or when companies engage in financial operations outside of the traditional regulatory sphere.
“If there are risks at the moment, it may be in the area where supervision does not yet have a full view and risk management tools are not implemented in the way they are in banks and insurance companies,” Lindner said.
